Saturday, May 2: Today in Gold and Silver

NEW YORK ( TheStreet) -- Gold had a slight negative bias all through Far East and early London trading on their Friday.  Someone tapped on the price at 1 p.m. in London, which was 20 minutes before the Comex open---and the selloff continued minutes after the open.  The low tick came shortly after the 9:30 a.m. open of the equity markets---and then chopped sideways into the 1:30 p.m. Comex close before rallying a bit into the close of electronic trading.

The high and low ticks were recorded by the CME Group as $1,184.40 and $1,168.40 in the June contract.

The gold price closed yesterday at $1,177.90 spot, down $6.10 from Thursday.  Net volume was pretty light at only 103,000 contracts.

Here's the 5-minute tick gold chart---and the only real volume spikes came at 8:30 and 10 a.m. EDT, which is 6:30 and 8:00 a.m. on this chart, so add two hours for EDT---and use the ' click to enlarge' feature.

The silver price didn't do much in Far East trading---and began to head lower at, or shortly before, the noon London silver fix---and it's low tick came around 10:30 a.m. EDT.  From 1 p.m. until the Comex close 30 minutes later the silver price rallied a bit, before trading sideways into the close of electronic trading.

The high and low in that precious metal was reported as $16.26 and $15.895 in the July contract.

Silver finished the day at $16.095 spot, down half a cent from Thursday's close.  Net volume was pretty respectable at 32,000 contracts.

Platinum traded flat until shortly after 11 a.m. Zurich time---and then it, too, got sold down---with the low coming around 12:30 p.m. in New York.  It rallied a few dollars into the close as well but finished the Friday session down $13 at $1,129 spot.

The palladium chart looks like the platinum chart---sort of---and it closed yesterday at $772 spot, down four dollars from Thursday.

The dollar index closed late on Thursday afternoon in New York at 94.81---and traded unchanged until minutes after 2 p.m. Hong Kong time.  It chopped lower until shortly after 10 a.m. in London---and the subsequent rally topped out at 95.40 just minutes before 1p.m. EDT.  It chopped quietly lower in the close.  The index finished the Friday session at 95.21---up 40 basis points on the day---and gaining back the 40 basis points it lost on Thursday.

Here's the 1-year U.S. dollar chart---and as you can see, we've had a bounce off of its extreme oversold condition, so we'll have to see how things develop as next week's trading unfolds.  However there isn't anything from preventing it from becoming even more oversold.

The gold stocks opened lower---and then rallied in a wide range throughout the Friday session.  It flirted with positive territory a few times, but couldn't quite close in the green---and finished down a miniscule 0.04 percent.

The silver equities also opened a hair lower, but bounced into positive territory almost immediately---and stayed in the green [for the most part] for the remainder of the Friday session.  Nick Laird's Intraday Silver Sentiment Index closed up 0.73 percent.

The CME Daily Delivery Report for Day 3 of deliveries into the May contract showed that 1 gold and 143 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  The largest short/issuer in silver was Credit Suisse with 91 contracts---and JPMorgan was the largest long/stopper once again with 46 for its client account---and 48 for its in-house (proprietary) trading account.  The other long/stopper of note was HSBC USA with 40 contracts.  The link to yesterday's Issuers and Stoppers Report is here---and it's worth a quick look.

The CME Preliminary Report for the Friday trading session showed that gold open interest in May rose by one contract to 227 contracts---and silver's o.i. fell 479 contracts to 1,248, minus the 143 contracts mentioned above.

I missed a smallish deposit into GLD on Thursday.  That amount totalled 9,593 troy ounces.  And yesterday an authorized participant added a further 76,743 troy ounces.  As of 6:54 p.m. EDT yesterday evening, there were no reported changes in SLV.

There was no sales report from the U.S. Mint yesterday.

For the month of April, the mint sold 29,500 troy ounces of gold eagles---10,000 one-ounce 24K gold buffaloes---and 2,851,500 silver eagles.  Based on these sales, the silver/gold ratio works out to 72 to 1.

Here's Nick's chart showing the dollar value of U.S. gold coins sold vs. the dollar value of U.S. silver eagles---and as you can tell, except for January in each of the last two years, the dollar value of each is pretty much neck and neck.

By the way, I've been corresponding back and forth with the Royal Canadian Mint looking for the fourth quarter report---and their 2014 annual report.  It still isn't available---and won't be until the end of June, at least that's what they told me yesterday.  You have to wonder what's going on that it takes six months to produce these reports, as they should have been out ages ago.

Over at the Comex-approved depositories on Thursday, there wasn't a lot of gold movement, as only 6,748 troy ounces were received---and nothing was shipped out.

In silver, there was 599,440 troy ounces reported received---and 300,049 troy ounces shipped out the door.  The receipt was at Brink's, Inc.---and the withdrawal was from Canada's Scotiabank.  The link to that activity is here.

There was no reported in/out activity at the COMEX-approved gold kilobar depositories in Hong Kong on Thursday.

The Commitment of Traders Report, for positions held at the close of trading on Tuesday, was pretty much as Ted Butler expected, as the headline numbers in gold and silver showed basically unchanged.  But, as Ted pointed out, the changes under the surface in silver were quite weird.  I'll dispense with the gold activity first---and then deal with silver.

In gold, the Commercial net short position increased by only 1,866 contracts, which is about as close to unchanged as you'll ever see, as it's barely a rounding error.  The changes in the Big 4, Big 8---and the raptors, aren't worth mentioning.

Under the hood in the Disaggregated Report, it was slightly different as the Managed Money increased their short position by a further 4,235 contracts.  The unblinking non-technical longs in the Managed Money category went in the other direction, adding 6,693 contract to their already impressive long position.

In silver, it was, as Ted Butler said---" just plain weird."

On the surface in the legacy COT Report, it was basically unchanged as well, as the Commercial net short position increased by a tiny 163 contracts, which isn't even a rounding error.

But here's where it gets strange.  According to the numbers, Ted says that the Big 4 traders added another 2,700 contracts to their short positions---and the '5 through 8' traders increased their short position by 2,800 contracts.  The raptors, the Commercial traders other than the Big 8, went long 5,500 contracts---opposite, of course, what the Big 8 went short.

Why would the Big 8 do that, Ted wants to know.  So do I.  When I asked Ted what JPMorgan's new short-side corner was in the Comex silver market, he was reluctant to assign the 2,700 contracts that the Big 4 went short to JPMorgan.

It doesn't make any sense unless there's been a mistake.  The headline numbers in silver look about right, but the internal structural changes are a big mystery.

Under the hood in the Disaggregated COT Report, the technical funds in the Managed Money category added a whopping 5,441 contracts to their short position---and the unblinking nontechnical funds in the Managed Money category added another 1,798 contracts to their impressive long position.

I look forward to what Ted has to say about it, but as you can tell from above, he has his problems making sense of it all.

One thing is for sure, though---and that's that next week's COT Report will make all things clear---but only if things don't blow up between now and Tuesday's cutoff for next Friday's COT Report and Bank Participation Report.

Since the Tuesday cutoff, of course, the COT structure has improved immensely---and as I said in yesterday's column, we're back to wildly bullish in silver---and may be in gold as well after yesterday's new low tick to the downside.

Here's Nick Laird's " Days of World Production to Cover COMEX Short Positions" chart for the Big 4 and Big 8 traders in all physical commodities, updated with the data from yesterday's COT Report.  As a result of the changes in yesterday's COT Report, the short position in silver held by the Big 8 traders has now blown out 165 days of world production, which is in the neigbourhood of 380 million troy ounces.

Nick was also kind enough to send along the weekly withdrawals from the Shanghai Gold Exchange for the week ending April 24.  During that reporting week, they withdrew 50.796 tonnes---and here's his most excellent chart showing that change.

Year to date, there have been 782.231 tonnes reported withdrawn from the Shanghai Gold Exchange, so we're mostly on track (for the moment) to equal or exceed the withdrawals reported in 2014 and 2013.

Here's the cumulative weekly gold withdrawals from the SGE---and it's also courtesy of Nick Laird, so you can put the numbers in the previous paragraph in some sort of perspective.

I've hacked and slashed---and have the number of stories down to a reasonable number.  A fair number I've been saving for today's column for length or content reasons---and I hope you have the time to spend on the ones that interest you the most.

¤ The Wrap

As I think I’ve opined previously, in considering all that has transpired over the past 30 years, it does not appear possible that JPMorgan or any other entity could have ever established as large a long COMEX silver futures position as the bank has acquired in actual metal. And I say this fully recognizing that I discovered that JPM did hold 85,000 long COMEX gold futures contracts in the late summer of 2013 (after holding 75,000 short gold contracts at the start of that year). In other words, there’s no way in this world that any one entity could ever acquire the 70,000 net long COMEX silver futures contracts that 350 million oz would represent. For one thing, it would stand out like a sore thumb, even for a comatose regulator. For another, there is nowhere near enough counterparty short capacity in COMEX silver futures to allow for any entity to get long 70,000 silver contracts.

What I didn’t begin to contemplate 30 years ago was that any entity could possibly accumulate 350 million oz of actual silver. After all, 35 years ago the silver world was turned upside down by the acquisition of 100 million oz by the Hunt Brothers. But now in hindsight and based upon the continuing flow of the evidence, it appears JPMorgan pulled off the impossible, only in a different manner and with much larger quantities than I ever imagined. Instead of trying to get long COMEX future contracts (which I claim would have been impossible), JPM took my longstanding advice and bought physical silver (and didn’t even sign up as a subscriber – talk about ingratitude).

I can’t prove in advance that JPMorgan won’t use its accumulated physical silver position to continue to manipulate the price, but it’s hard for me to believe they would waste the opportunity for perhaps the biggest financial score in history, and for what –the dubious accomplishment of keeping a metal considered insignificant by the world’s financial community at an artificial low price?   If someone wants to advance that gold might be kept in check because it is an important monetary asset owned by most of the world’s central banks, that doesn’t seem unreasonable. But silver isn’t owned by any world government entity so that puts it in a different league altogether . - Silver analyst Ted Butler: 29 April 2015

Today's pop 'blast from the past' is another one hit wonder, but what a hit it was.  Here's Henry Gross from 1976.  I've posted it before, but it's been many a moon since I did, so here it is again.  Believe it or not, it's a song written about the death of Beach Boy Carl Wilson's Irish setter of the same name.  The link is here.

Today's classical 'blast from the past' is on the longish side, but in the piano concerto genre, it's certainly in the Top 5 for me.  I heard part of it on CBC FM when I was driving to work earlier this week.  It's Brahms' 4-movement Piano Concerto No. 2 in B Flat major, Op. 83 that he completed in 1881 after working on it for three years or so.  The premiere of the concerto was given in Budapest on November 9 of that year with Brahms as soloist, and was an immediate success.  Here's the Munich Philharmonic with Sergiu Celibidache conducting---and on the keyboard is the incomparable Daniel Barenboim.  The link is here.

With gold making a new low for this three-day move down on Friday, there's no doubt that there was further improvement in the Commercial net short position in that metal.  Silver didn't make a new low---and no moving averages were broken, so the trading activity we did have wouldn't have much effect on the COT Report, because the Managed Money doesn't do anything until moving averages are broken either up or down---and those only occur when JPMorgan et al. make it so.

Here are the six-month charts for all four precious metals, plus WTIC, as it continues to rally while the precious metals are being kept in check.

Well, if JPMorgan thought it could keep its silver accumulation activities secret, those hopes got totally blown out of the water during the last week, as the story has popped up on at least half a dozen Internet sites that I've seen, including the big Web sites at, Sharps Pixley---and now Zero Hedge.  When Ted Butler's efforts get picked up by the likes of them, Jamie and the boyz at JPM must know that their silver price management scheme is on its last legs.  That applies to the other three precious metals as well---and all commodity prices in general.

The only thing that's not known is the timing---and the sequence of events as we cross that particular event horizon.  I do get the sneaking suspicion that whatever new precious metals prices rise out of the ashes, they won't be free-market prices, but they will be astronomically higher than they are now.

I'm still somewhat taken aback by the outrageous pounding that the precious metals took at the hands of JPMorgan and their HFT buddies on Thursday.  You would think that some of the precious metal miners, or maybe the World Gold Council or Silver Institute, would make either a statement or have a question or two.  But the thought of calling the CME Group to task on this is obviously not on their "to do" list.

This in-your-face move smacks of a certain amount of desperation, as "da boyz" were determined to take back all the COT deterioration of Monday and Tuesday, along with part of Wednesday---and they did it in less than 48 hours.

So we now await developments, as the next move is up to them.  There's not much downside price movement left in either gold or silver, but they may give it the old college try on Sunday evening, or in early trading in the Far East.  But once they've pulled that last rabbit out of the hat, if there in fact is one, then we'll be back to "locked and loaded" for another rally---and it only remains to be seen if they'll step in front of that one like they did on Monday and Tuesday just past.

Here's hoping they'll put their hands in their pockets this time.

I'm done for the day---and the week.

See you on Tuesday.

Ed Steer

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